May 5, 2023
Shopify is laying off nearly 2,000 people, or 20% of its staff, and selling its logistics division to Flexport for around 13% in shares. Those affected by the layoffs will get at least 16 weeks of severance compensation, plus one extra week for each year of service at Shopify. They will also be eligible for medical benefits for the same time period.
In a note to employees and shareholders, Lütke stated, “Shopify will be smaller by about 20 per cent and Flexport will buy Shopify Logistics; this means some of you will leave Shopify today. I recognise the crushing impact this decision has on some of you, and did not make this decision lightly.”
Furthermore, Lütke cited the growing artificial intelligence (AI) revolution as another reason why Shopify might be better off returning to its roots. Last February, Shopify participated in Flexport’s Series E round, and a few months later, it acquired logistics startup Deliverr for more than $2 billion.
The sale of Flexport’s logistics division seems to represent a large writedown. Flexport was recently valued at roughly $8 billion, implying that Shopify’s new investment is worth little more than $1 billion, albeit this does not include the interest purchased in Flexport’s Series E round 15 months ago. The change is intended to help Shopify stay nimble, inventive, and simple as it enters the AI age.
The sources for this piece include an article in TechCrunch.
